Thursday, November 30, 2006

Worldspan has long been the rumored target of acquisition by Amadeus, but the attention has now shifted to Travelport's Galileo.

I have no idea either way but the searches of "Worldspan" and "Travelport" in the same search entry are one of the leading drivers of traffic to my blog. Clearly someone/people are typing that a lot into Google.

Completely crushing my hopes of having an acquisition to talk about - Expedia have launched an organically developed Japanese site - Expedia.co.jp. Japan is arguably the hardest market in the world to sell air online as no-one has cracked a way to show a consolidated display from the two GDS's - Axcess and Infini. Expedia either haven't cracked it either or are still working on it so have launched with hotels only.

On the hotel side there have been two issues that have been hard for non-Japanese players to solve for a launch. Firstly that Rakuten Travel (Mytrip) charge hotels a low as 6.5% commission setting an expectation for the hotels on pricing for domestic demand and secondly how to load, sell and fulfil the traditional Ryokan inventory. Not sure if Expedia have solved these but congratulations are due in putting the site into double byte Kanji and in setting up a local fulfilment system.

I don't understand how Priceline plan to make this work. I have praised in the past their integration work and they have enjoyed the results with huge growth in online hotels sales in Europe. However it can only be a mistake to assume that you can market the same brand [Booking.com] to different customers with differentiated products. The only way to try and do this is that I can think of is to have different product or pricing depending on where a customer comes from (either by country or marketing channel). That never works online - as I have said before. Will have to wait for the site launch to see if Priceline can make this work - but I fear for them. Sounds like the word "synergy" and "costs savings" have been overly used across the board-rooms of Priceline Europe.

UPDATE - found an interview with Adrian Currie - Priceline CFO - from ITB in October. Talks about ActiveHotels and Bookings in Europe. Talks of successful integration but no mention of killing the Active Brand.

UPDATE 2 - in the Q4 2006 earnings call the CEO of Priceline Jeff Boyd talked more about the plans for the ActiveHotels brand in Europe. There is no intention of killing off the brand - rather the marketing focus will go behind the Bookings brand. I think that is a good balance. Would continue to caution against making the products inter-changeable to avoid the problems that best Expedia and Hotels.com when they first began to work on common inventory pools. But there does come a point when you have to balance the cost of marketing against the potential cannibalisation.

Tuesday, November 28, 2006

The Travel 2.0 boom is spreading to Europe. Where Are You Now (WAYN) has raised $11mm in a funding round that included VC groups but also Travel 1.0 entrepreneurs such as Brent Hoberman of Lastminute.com and Adrian Critchlow and Andy Phillipps, co-founders of Active Hotels (sold to Priceline).

Monday, November 27, 2006

Tralliance Corporation is the company pushing the roll-out of the ".travel" URL domain. Have scored a couple of coups in recruitment including hiring Daniela Wagner from OctopusTravel / Travelport. Daniela dragged GTA into the online era and grew Octopus to be the top hotel booking engine of airlines, so she knows a lot about online travel. She and Tralliance announced last month that they have 25,000 companies signed up to the .travel domain at $100 a pop (a cool $2.5mm in revenue).

That's a good start but I don't yet understand the compulsion for a travel company to have a .travel domain. Am sure most companies will buy the domain for their brand to stop somebody else (though a quick search shows that Webjet, Wotif and Expedia are yet to buy theirs - or at least switch on a referral). But aside from the defensive move it is not clear what the benefits area. Don't understand how having a .travel domain is better than having a .com, .co.uk, .com.au etc domain. You would never want to launch a business on the basis of having a .travel domain where someone had the same name under .com. The key for success then for Tralliance is to win support for their search product - search.travel. If this search engine gains traction then that could provide the positive reason for companies to support the .travel domain. Without it I see little benefit. Winning in search will also be hard work as Tralliance will be battling well established providers from Google at the top end through Sidestep, Kayak and Tripadvisor in the middle and Bezurk at the focused end.

Am not going to count out Daniela but am starting off very sceptical.

UPDATE - 16 July 2007 TravelWeekly are carrying the story that Ron Andruff the President of Tralliance and Cherian Mathai the COO will leave the company "pending finalization of certain agreements.". Which is later clarified to mean that their severance packages are still being formulated. The announcement has comments from Triallance parent company (theglobe.com) boss Michael Egan using very positive language about transition, growth plans and other improvements however as the annual report shows (and TravelWeekly quote).

According to theglobe.com's annual report, 25,200 domain names had been sold as of March. The company collects $100 a year for a dot-travel domain name.

Friday, November 24, 2006

I have recently installed a site meter. The part I love the most about it is I can see where my modest amount of traffic comes from, including the search terms in Google that result in a link to the blog. Today I received the greatest complement ever. If you go to Google.de (German version) and type in "price for an elephant" I am the top result. Clearly there is no better place on the planet other than the BOOT to advise Germans on how much to pay for an elephant. Brilliant!

Acquisitions - Talks about his acquisition thinking saying that they have "external advisors looking at possibilities". Quite rightly he is only looking in the online space and only at product ranges they don't have - ie not air. Says he has "no current target in mind".

International - Also talked about thoughts on future of international bookings online. Believes that consumers will soon be able to booking multi-sector international fares with different airlines - like domestic.

Hotels - Admits hotel business is very small but is confident of growth. "Will not be a material component of profit in the next six months".

Wednesday, November 22, 2006

Travelport's Q3 06 results are out. Net revenue is at $631mm - down from last quarter's $693mm. B2C net revenue was $193, well down on Q2 of $221mm - in fact on par with Q2 2005 results of $195. But that is not the story. The story is that there was a "Net loss of $1.2 billion which included a pretax non-cash impairment charge of approximately $1.2 billion".

Secondly - a non-cash impairment of $1.2 bil means that there is a net loss of $1.2bil means a zero EBITDA (actually -$1.3mm).

The answer in the first one is buried deep in the Q3 press release where they say

"the Company recorded a total impairment charge of $2.4 billion (which includes the estimate of $1.2 billion taken in the June quarter), representing the difference in the carrying value of goodwill of the Company’s B2C and B2B reporting units and the implied fair value of goodwill of those reporting units"

In other words - I called the "monkey off the back" too early. I went back to the Q2 results and listened to Q3 call to see if I missed it. I did not. In the Q2 results they estimated the impairment of $1bil but through the period of Q2 realised that it was double that. Ouch!

The second - appears to be legitimately put down to continued restructuring and business challenges. They say on the conference call that B2C (Oribit, HotelClub/RatesToGo, Cheaptickets and eBookers) are at break even. Presumably held back mainly by eBookers (see also the delay in role out of their new Orbitz backed platform).

Tuesday, November 21, 2006

Like the rest of the Internet world I have been tracking the phenomenon that is peer-to-peer video sharing and destination sites. From the gigantic (YouTube, MySpace) through the tussle in the middle (Metacafe, Break.com, ebaumsworld and Revver) to the targeted (Heavy). Only a matter of time before we saw the dedicated travel sites. First to come to my attention is Travelisitic. Founded by ex-MTV and ex-iFilm execs (MTV bought iFilm).

You can tell from the monetisation efforts (lots of pre-roll video and good Google Adsense integration) and video quality that the founders know what they are doing. Will have a challenge in keeping out the porn and antics that are so popular on the other site while at the same time building scale but a great start.

Monday, November 20, 2006

I have gone from feeling contempt for offline agents that have been slow to move online to almost pity. Clearly Flight Centre has made huge mistakes online (as we discussed here). Now we have a better one. Large Australian franchise network - Jetset Travel - have announced boldly a plan to "step up its online offering with the launch of a fully bookable website next year".

Unbelievable. Simply Unbelievable.

10 years after the launch of Expedia, 9 years after the float of Travel.com.au on the ASX, 7 years after the birth of comparative shopping engines with the launch of Sidestep and 6 years after the launch of Wotif, Jetset have announced that they will have a site up and running by mid next year. The CEO is competing with himself for understatements of the century when he says that Jetset is "late to market...and..to some extent playing catch up" and even better "The lack of a bookable online engine was my first priority".

That truly is like one dinosaur up to their nose in tar, with a tsunami, meteor and earthquake all on the way, turning to another and saying "next year I am going to grow an opposable thumb"

Wednesday, November 15, 2006

I have just returned from an enjoyable lunch put on by FCM (Flight Centre's corporate travel arm). As you know I am a fan of good corporate agents - even with my strong history in online travel. They invited former Australian cricket captain Steve Waugh to speak. Very enjoyable lunch and talk from Steve. I even managed to win a copy of his autobiography.

Qantas was a sponsor of the event and a representative of their corporate sales department opened the event with a speech and general introduction. Now, keep in mind that this Qantas rep is speaking to a room of FCM clients. That is hard core road/air warrior travellers. Almost certainly everyone present is a top tier Qantas flyer. The Qantas rep spoke for 15 minutes on "what is happening about Qantas". He talked about the airlines they plan to buy, the battles they plan to fight with their unions and the costs they plan to cut. Also took a few minutes to complain about fuel prices and low cost carriers. I found this staggering. Here he is with a captive audience of some of the top individual customers of the business and not once did he say thank you. Not once did he talk about a commitment to the corporate travel, about quality of product and customer service...nothing about how he was going to make things better for us as top customers. It was like he was talking to a room of share holders, not customers.

To me this summarises all that is wrong with Qantas. They have become so bottom line focused that they have lost a sense of how to keep customer's happy. They have monopoly or near monopoly rights on key routes (especially the Pacific Route and the politician traffic out of Canberra) that they are not aware of the growing disquiet among their customers. If I was the Qantas rep at this luncheon I would have spent less time basking in the reflective glory of being at Steve Waugh's table and more time shaking the hand of every single customer in the audience thanking profusely and begging for feedback.

Clearly the Travelpost.com deal we discussed early this week was only the beginning of Sidestep re-inventing itself. Today we have news that Sidestep will take a feed of blog and user generated content from RealTravel. These are both great moves by Sidestep. A comparative shopping engine cannot build loyalty the same way a full service provider can - by definition. Deep content not only helps counter this but should also increase traffic from SEM and SEO activity.

Tuesday, November 14, 2006

eLong.com, has announced some great numbers for Q3 with a 40 percent year-on-year growth in revenues to US$9.4 million. The bulk of this ($7.3mm) still coming from hotel commissions but air commissions are growing faster than hotels (47% vs 38%). Congrats to the company on a quarter of positive operating income ($215k) and I look forward to hearing what new chair Barney Harford and newish CEO Tom SooHoo plan to do with some $142mm in the bank.

"Sales and marketing expenses...increased... due to hiring of new sales and marketing staffs"

"General and administrative expenses... increased...primarily due to the hiring of additional staffs"; and

"Product development expenses...increased...primarily due to hiring of additional product development staffs"

That is a lot of investment in a lot of staff.

The CTRIP and eLong battle is a look back in time at the battle between Travelocity and Expedia in 1999 and 2000 where Expedia took over Travelocity as the largest of the time. Though in the case it seems that CTRIP's lead is expanding and they are finding time to invest in people and product to go further. Am going to enjoy watching this battle.

Monday, November 13, 2006

Travel weekly are running a story with big talk from Fairfax (huge Australian media company) on their plans for online travel. Fairfax made a very tentative step into travel when they acquired independent accom provider Stayz in December last year for AU$12mm. I always thought this a strange first move into travel. While I think the potential for the independent accom sector is great, Stayz did not have a particularly strong brand at the time and its technology is nothing special. There has been great interest in what Fairfax would do next. Now we know - well we have a bit more of an idea - well we have a little bit of a hint of a possibility.

According to Travelweekly, Fairfax will launch four sites in the next six months. The first is Hotelz. The quote from the article is that Fairfax and Zuji have entered into a "content deal". Unclear what that means but from the look of the hotelz beta site it involves a white-label booking engine. The site is in beta so can't be too critical yet but if they want to challenge Wotif, Lastminute, RatesToGo etc then it is going to need a better search functionality. Typing Sydney into the Hotelz search box and choosing Australia it still asks me for clarification - if I have chosen Sydney Australia, how could I possibly be thinking about Nova Scotia?

The engine url has regular references to travelpn.com - not heard of them before though judging by Alexa they provide white-label solutions for a number of airlines and Zuji. Could be an offshoot of Travelocity.

I like the Chutzpah and drive of Fairfax Digital travel boss James Cassidy claiming that "within 18 months it [Fairfax] will become a major force in online travel, even rivalling Wotif". However the basis for his claim does not stand up to scrutiny. He says “Wotif offers bookings within one month and only 30 per cent of the market book in that window,”. It will be a fatal error for Fairfax to chase the other 70% (assuming this number is true) as all of the money to date in online travel is in a booking window within one month. The sectors that are booking beyond that date are the least likely to book online.

I also caution them on relying too much on white-labels. Controlling product and inventory is critical to success in online travel. Telstra' s Sensis jumped into online travel through GoStay - a white-label of AOT's needitnow - and it has gone nowhere. My earlier comments on that are here. Rumours are Travelport is also remembering that lesson and unwinding its efforts to combine offline and online hotel contracting.

Sunday, November 12, 2006

Was asked in an email what I meant when I described Travelpost.com as "not the prettiest of sites" and thought I would share my response with all. I am enjoying watching the battle for eyeballs from review and shopping comparison sites. Clearly Kayak and Sidestep are leading the comparative engine battle (with a little bit of Bezurk on the side in Asia) and Tripadvisor, Away, Gusto and Travelpost taking on each other in the review market. As anticipated the distinction between these two markets (if there ever was one) is disappearing.

The review sites have a lot in common - search box at the centre top, highlighted reviews at centre and either banner space or sectional draw outs in the right hand page groups. The problem with most - and this is my main criticism of Travelpost - is that the contents of the middle or main section are determined either by timeliness of the review, broad (automated) assumptions about me based on my profile or IP address or general site popularity. In other words the community has chosen the layout of this valuable real estate. I do not think this should be left to the community or a full technical solution. In review/community based travel travel a person/producer/marketer should own the home page and merchandise it with the same professionalism that the full service sites employ. This is why Tripadvisor continues to lead the bunch - it has matched the community strength of content with the Expedia strength of monetisation and production.

My recommendation to Travelpost then is to take a more hands on approach to management of the home page. Combine the science of the analysing consumer data with the emotion of a good production team to deliver a home page that at best speaks to me as an individual or at worst I could find interesting in general sense (ie the content is good in is own right even if not targeted). Compare that to the current home page where the top of the fold is just a list of hotel reviews by date showing hotels and destinations that I do not care about.

PS - Posted a review on Travelpost while looking into this blog post. Here is my sample review. Not sure why but the text doubled on itself. Could easily been my fault but can't find how to edit it.

Thursday, November 09, 2006

Cute story of the week - a developer in a small town in Switzerland has converted the local 135 year old jail into a boutique hotel but has kept the jail theme. The Jailhotel Löwengraben was a prison right up until the end of 1998. Would not call this luxury by the photos but looks comfortable - in a quirky (maybe even kinky) kind of way.

Credit where credit is due - came across this hotel while looking at the latest Zuji AU newsletter.

Wednesday, November 08, 2006

Continuing the trend of social networking - including my coverage of Sheraton's, Amadeus and Webjet's efforts (here and here) - Sidestep is buying review and blog site Travelpost.com. Here is the travelmole and eyefortravel reports. The Travelpost site is not the prettiest of sites but if the claimed 500,000 reviews, photos and blogs is true this is a deep, useful collection of content that will help Sidestep with traffic (from search engines) and conversion (by improving customer site interaction). Kayak are probably taking this deal as confirmation that their development of the "Forums" and "Buzz" features was worth it. As per yesterday this on the one hand confirms the merit of the idea of Planit for Webjet but on the other hand raises the execution pressure on Webjet (starting with the URLs) - especially where they are spending one million of hard earned shareholder dollars.

A two year old boy was stopped trying to board a plane in Dubai bound for Turkey because his name was the same as that on an outstanding warrant. Reminiscent of the spate of US mistaken identity cases. The beauty with this one is not only did the boy's name match the warrant but SO DID HIS AGE! No-one in the Dubai security forces questioned an arrest warrant with a birth year starting with a 2. Brilliant.

Monday, November 06, 2006

Great results for Sabre/Travelocity this quarter - with strong gains in the European online business. All the news outlets carried the quote "best quarter ever". European business was up a third with EBITDA up to US$31mm (+66%). Travelocity had a terrible start in Europe. Arrived there late behind Expedia and the local Lastminute and eBookers then tied itself up in knots with a complicated relationship in Germany. I remember a disatrous TV campaign from 2000/2001 (can't find a link anywhere online) based around a guy needing a break. Bleak scenes of him stuck on the tube, in the office and at home. Nothing about it made people want to identify with him or the company. Not that identification is critical but the ad carried none of the humour of the current commerical.

The question for Europe is whether or not Lastminute acquisition (or the new ad!) was the sole cause of the turnaround or whether there were also integration and management decisions that played a role. We may need to watch a few more quarters before we know the answer.

Thursday, November 02, 2006

Thanks to to Anonymous for letting me know that according to the SMH the elephants trying for months to make it from Thailand to the new Elephant enclosure at Sydney's Taronga Zoo have finally made it. Never found an answer for how much an elephone costs but the price for getting 4 (maybe 8) from Thailand to Sydney - a heavy $50mm.

Wednesday, November 01, 2006

Normally a business travel tip invovles how to get cheap WiFi, good international call rates and fast dry cleaning turn around without breaking the expense account. Today I simply have a video of the new Singapore Airlines first class. I could tell that this would make me a more productive business traveller and add enormous value to my employer but even I am not that good a liar. This is just excessive. It is just outrageous. It is a pure and utter waste of money...but...with God as my witness and bathed deep in shame....I want it!!!

Travel Consumer Blogs I Read

Non-Travel Blogs I read

Copyright Timothy Hughes

The stuff on this site written by me is mine, all mine. Feel free to link to it but please credit me. I make the material available on this site on a creative commons basis as per the Attribution-Noncommercial-Share Alike terms. My favoured attribution is "from the industry blog The Business of Online Travel copyright Tim Hughes". In all cases I retain the intellectual property rights in everything on this site written by me. This is my personal blog. The views in this blog are mine and not those of my employer. A full disclosure can be found here.